Bankruptcy Basics

For detailed answers to your Bankruptcy Questions call us at (845) 794-5928

Many people think that you can no longer file bankruptcy.  This could not be further from the truth.  The truth is that in 2005 certain laws were enacted titled the "Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005".  As that name implies, the new law was intended to prevent bankruptcy abuse.  Most people believed that it prevented individuals from filing for Chapter 7 bankruptcy.  This is not the case.  Thousands of people, just like you, still continue to file for Chapter 7, Chapter 13 and Chapter 11 bankruptcy protection each and every year.  One of the greatest benefits that Bankruptcy Debtors receive is the "Automatic Stay".  The automatic stay, which is put into place upon the initial filing of a bankruptcy, generally stops your creditors, with certain exceptions, from contacting you or attempting to collect upon the debts that you owe them.  This reprieve from creditor harrassment is a very welcome thing.  Anybody that has received creditor collection efforts, phone calls and the resulting stress can attest to this.

Isnt it time you stopped using your limited funds to pay for the past and began using those same monies to purchase something in the future.  I liken it to this situation:  Would you rather use the money that you presently have in your pocket to purchase tonight's dinner or would you rather use that same money to pay for yesterday's dinner?  As long as you continue to commit future income to the repayment of your existing bills, you will never improve your situation until you have paid all of those past bills off.  How many years and how much of your future monies will that take?

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is sometimes referred to as "straight bankrupty".  Chapter 7 is not a repayment plan.  It is commonly filed by individuals who have little or no equity in their assets and have significant amounts of unsecured debts, such as credit cards, medical bills, deficiencies upon repossessed vehicles, and the like.  Chapter 7 bankrupcy is not intended to cure arrearages owed upon mortgages or other secured loans.  Not everybody is eligible to file chapter 7 bankruptcy.  Presently, an income driven test is used to determine if someone is eligible to file chapter 7 bankruptcy.  If an individual is not eligible to file chapter 7 bankruptcy, they may still be eligible to file chapter 13 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is sometimes referred to as "individual reorganization".  Unlike chapter 7 bankruptcy, chapter 13 involves a repayment plan of up to 60 months.  The monies that are paid into this repayment plan go to cure the arrears owed upon secured debts and then to the remaining debts, based upon certain priority rules.  A chapter 13 plan can pay some or all of the debts, depending upon a number of factors.  Chapter 13 bankruptcy is often used to fix a mortgage foreclosure or to cure back payments owed upon cars or other secured debts.  There are limits as to who may file a Chapter 13 Bankruptcy.  Chapter 13 Bankruptcy depends upon having some source of funds from which to pay a Chapter 13 Trustee who then pays certain of your creditors according to a plan of repayment which must be confirmed by the Court.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy, due to its high costs, is generally reserved for individuals with significant amounts of debt, and for corporate reorganization as well as those that cannot file Chapter 13 Bankruptcy due to their significant debt amounts.

Chapter 12 Bankruptcy

Chapter 12 Bankruptcy is generally reserved for those in the fishing and/or farming industry.

Please call the Law Office of:
Richard Scott Zirt
at (845) 794-5928
for a complimentary consultation.